Direct Debit Indemnity claim refused by First Direct

Cardconcerns

My kids school bus service provider had its license revoked by the Traffic Commissioner for persistent safety and other breaches on 30th January, effective 31st March (so the kids could get to school until term ends).The company immediately put out a message saying it would appeal the ruling and would continue to provide the service. On that basis, we allowed our DD (£125 per child, per month) to go out on 1st February.
They provided one day of service  (2nd February) and then didn't turn up on Monday, leaving the kids stranded. A recorded voicemail on the company number said they would no longer provide bus services. In other words, they waited to get the DDs in for that month then legged it.
I immediately cancelled the DD and tried to get my bank (First Direct) to do an Indemnity claim - they refused as they said there had been no breach of the DD agreement. All the other parents tried the same thing: all were successful with the exception of those at First Direct (including people who bank with HSBC - FD's parent bank). The consensus was that banks were happy to 'bend' the Indemnity rules to help their customers. I have complained to FD, had my complaint rejected, and appealed to the Ombudsman.
What else can I do to get this £250 back?
This looks like a clear case of fraud but FD says it doesn't fall under the DD Indemnity rules or any other rules - they seem to be giving this crook a free pass.
Any advice?

maisie_cat

The DD hadn't been cancelled by you and at the point that the DD went out it was authorised.
What you have is a breach of contract which is a different thing.

Cardconcerns

Thanks Maisie. So my only remedy is against the bus provider, who isn't answering calls or emails (and will probably declare bankruptcy in the near future)?

DullGreyGuy

The DD Guarantee covers "mistakes" made in the collection of payments (eg you cancelled it but they collect another payment anyway or you agree to pay £10 a month and they collect £10,000).

The DD Guarantee doesn't cover breach of contract or other matters. I assume you didn't hear exactly what the other parents told their banks and so it may be less about a bank policy and more about how the others have described the situation. 

Cardconcerns

DullGreyGuy said:

I assume you didn't hear exactly what the other parents told their banks and so it may be less about a bank policy and more about how the others have described the situation. 

We were on a WhatsApp group so I did hear more or less verbatim what other parents said. Many banks just worked through the list of reasons to claim under the DD Guarantee and settled on the most plausible. One common reason used was 'the provider has not notified the customer of a change" - even though this isn't really applicable. First Direct took a more officious approach and wouldn't even explain the various circumstances in which you can use the DD Guarantee. My guess is that they (alone) were applying the rules correctly. But unfortunately that doesn't get my £250 back and it is galling to hear that HSBC, Barclays, Santander, TSB, Lloyds, etc. were willing to help.

dunstonh

Many banks just worked through the list of reasons to claim under the DD Guarantee and settled on the most plausible

Its worth noting that the banks that repaid it under the DD scheme can come back later and re-debit it if it is found to have been taken correctly.  An initial refund is not a guarantee that they are getting their money back.

All the company has to do is inform the bank that there was no breach. i.e. the amount had not changed and had been collected as agreed by the mandate.

In addition, all those that have used the guarantee scheme are now in debt to the company.  If the firm fails, the administrator will have a duty to maximise debt recovery.  So, they could come after all those parents.

This looks like a clear case of fraud but FD says it doesn't fall under the DD Indemnity rules or any other rules - they seem to be giving this crook a free pass.

Using a false reason to use the guarantee scheme to get a refund is fraud.

Cardconcerns

dunstonh said:

Using a false reason to use the guarantee scheme to get a refund is fraud.

Agreed. And I'm not saying I want to do that. I guess I'm making two points.
1) The fact that banks implement the DD guarantee in different ways is unfair and problematic.
2) There is currently no mechanism (via the banking system) to recover a DD when a product/service is not provided.

MattMattMattUK

Cardconcerns said:

dunstonh said:

Using a false reason to use the guarantee scheme to get a refund is fraud.

Agreed. And I'm not saying I want to do that. I guess I'm making two points.
1) The fact that banks implement the DD guarantee in different ways is unfair and problematic.
2) There is currently no mechanism (via the banking system) to recover a DD when a product/service is not provided.

That is correct in relation to the banking system, the correct route for recovery is court action. 

DullGreyGuy

Cardconcerns said:

dunstonh said:

Using a false reason to use the guarantee scheme to get a refund is fraud.

Agreed. And I'm not saying I want to do that. I guess I'm making two points.
1) The fact that banks implement the DD guarantee in different ways is unfair and problematic.
2) There is currently no mechanism (via the banking system) to recover a DD when a product/service is not provided.

1) its inevitable, look at any set of regulations, guidelines, "rules" etc and each independent business that has to decide how they are going to comply (and how strictly they are going to comply) will inevitably come up with different solutions. If they didn't then there would be strong arguments that they are breaching competition rules. 

Even within an organisation you will find variance between different members of staff because we are all human and can take different interpretations on the same situation. Systems can help try and create uniformity by removing human decision making but then you get into the "computer says no" type situations that many customers hate.

2) Thats correct and by design. DD Guarantee isn't intended to cover breach of contract, supplier failure and other matters. If you want that sort of cover then you want to be paying by card instead which opens the potential for chargebacks. Many companies offer a discount for DDs over CPAs though so it's up to you to decide if you'd rather pay less or have more protections.